A variable workforce model can attract scarce talent, while driving significant cost savings and enhancing enterprise flexibility. How do today’s HR professionals partner with other colleagues, including Procurement teams, to determine the ideal mix of traditional versus flexible workers (independent contractors, freelancers, temp workers)? That is the “million-dollar” question.
This question is hard to answer because talent demand is not static and is constantly in flux. Where do best-in-class organizations draw the line between full-time employees and flexible workers? And if your organization isn’t using flexible workers, should you? That's where a total talent management strategy comes in.
In this flexible workforce webinar you will learn:
-- How, and why, progressive companies are balancing their traditional, full-time workforces with non-employee workers like contractors, freelancers, temps and SOW workers
-- The strategic benefits of taking a blended approach to your workforce
-- When and where to leverage flexible workers
-- How to build a step-by-step action plan unique to your organization
-- How to mitigate risks involved with the contingent workforce
-- The strategic value of building a talent community
4. Skilled labor shortage
By
2018
More jobs than
people to fill
them
Shortage of
30-40M
college-
educated
workers
BY2020
43% of U.S. workforce can
retire in the next 8years.
United States
66% of multinational companies say talent shortages
are likely to affect their bottom line in the next five years.
6. Shifting workforce demographics
29% of current U.S.
workforce. By 2019,
100% >= 55
will be 50% of the
U.S. workforce by
2020
MILLENNIALS (1981-1997)BABY BOOMERS (1946-1964)
On average, 10,000 Baby Boomers retire every day.
75%
of retirees want to
continue to work –
but want the
flexibility to
enjoy their
retirement
7. Non-traditional employment
BY 2020
contingent workforce
is 40%of total
U.S. labor market
of all job growth in
past 5 YEARS
was due to
contractor/temp
roles
93%
56%of
millennials choose
FLEXIBILITY
over more pay
82%say they are
optimistic about
FREELANCING
as a career path
MILLENNIALS
The U.S. contingent workforce is expected
to be 50% of total by 2020, or sooner,
depending on economic conditions.
8. Polling question 2
Is the contingent portion of your workforce
growing? Stable? Declining?
9. Challenges
• Knowledge workers leaving workforce
• Shrinking supply of skilled (STEM) workers
• Growth of the independent workforce (IC, freelancers, sub-vendors, etc)
• Increasing risk/complexity in managing total workforce
– Must balance FTEs with temp labor and independent workers
Opportunities
• Engaging independent workforce provides access to new pools of talent:
– Leverages the demographic trend towards self-employment
– Building a private talent community for re-engagement
– Public talent clouds (Catalent, Toptal, Hired, etc)
• Risk mitigation
• Cost savings (typically 15% to 20% savings vs. agency spend
– For every $1M in spend: $150K to $200K+ in savings
What does this mean for you?
Conclusion: Companies must develop a clear strategy to
direct source and safely engage independent workers
11. Enterprise talent management
A holistic view of your entire workforce—
ensures the right workers are available, in
the right place, at the right time
maximum business flexibility
14. Finding the right mix…
Traditional Workers vs. Flexible Workers
• The “million-dollar” question!
• Hard to answer, unique for each company
• Constantly in flux
• Many factors…
24. 1. Map your current organization structure—including all non-
employee, and outsourced resources
2. Clearly define all work being done across organization, and
who currently performs it
• Think in terms of output and deliverables, not just job
descriptions
3. Define skills/experience required for each role:
• Core vs. non-core, Internal-IP vs. external-IP
• Consider: Strategic/tactical, Variable/steady workload
4. Establish optimal workers required to do work:
• Employee
• Consultant
• Independent Contractor
• Temp/Freelancer
Create your own talent strategy (1/3)
25. 5. Estimate number of workers for current/projected workloads
within framework defined above. Think about the cushion
your business needs.
6. Process re-engineering – Some considerations:
• Does all the work still need to be done?
• Can it be done more efficiently?
• Can any of it be outsourced?
• Can it be packaged differently (“projectized”)?
• Ideal org structure?
7. Based on your unique business, decide on appropriate mix
of FTE vs. flexible workers by category
• Role, department, group, project
• Use decision matrix as guide
Create your own talent strategy (2/3)
26. 8. Discovery: Identify your workforce
• Do you have the right people on the bus?
• Are they in the right seats?
• Where are the gaps today? Anticipated in future?
9. Sourcing: Identify suppliers of talent
• How will you find/attract new workers?
• Can you be a “client of choice” for independent workers?
• Internal vs. external recruiting?
• Direct sourcing vs. 3rd party suppliers?
• What will the working relationship be between workers
and the organization?
10. Rinse and repeat!
Create your own talent strategy (3/3)
28. Flexible workers: 10-50% of
total headcount (FTE & flexible)
Some guidelines…
• Temporary: 50-80% of flexible
workforce
• Freelancer: 5-10% of flexible
workforce
• Independent contractor:
10-40% of flexible workforce
• Consulting: 5-10% of flexible
workforce
• Each business is unique! There is
no right answer…
Strike a balance
29. Risk, reward and the
double-edged sword
“Engaging independent
contractors is not inherently
illegal, and legitimate
independent contractors are
an important part of our
economy.”
—David Weil, DOL’s Wage
and Hour Division Administrator
The IRS, DOL and state agencies
ramping up enforcement, stating
46% of U.S. workers are
misclassified
30. Create a talent community
Web-based population of known talent
with specialized skills, who are interested in
working for you again
Who are they? Independent contractors,
consultants, freelancers, retirees, interns
and “silver medalists”
Welcome!
We’ve got a great session for you today, and we’re glad you’re here.
Before we get going, I thought it might be useful to give you a little context about who TalentWave is and what we do for enterprise clients.
So, with that brief intro to us, here’s what we plan to cover today:
Today’s complicated talent environment, and the growth of the independent workforce.
Enterprise talent management, that needs to take a holistic view of talent, while preserving flexibility and managing cost.
Potential sources of talent – when looking at the total workforce, there are a number of talent sources to consider.
Talent Supply/Demand modeling – some simple frameworks to help you think strategically about the right mix of talent for your company.
Developing a strategy – we’ll share some high-level guidelines on developing a unique strategy for your company.
Case study – Molly will share some details about Monsanto, and how they manage their contingent worker program.
A few success factors – some tips we’ve learned along the way, helping enterprise clients get their arms around this challenge.
Q&A
And we’re going to do all that in 30 minutes, or less, so that you have time for questions!
Let’s get started….
The predicted shortages are in spite of automation and robotics
I believe many HR depts are aware of this but don't realize it's imminent and don’t have a plan
Many HR departments don't even know who/how their non-EE are managed.
66% of multinational companies say talent shortages are likely to affect their bottom line in the next five years
According to 2010 Research Paper ‘After the Recovery’ - By 2018, there will likely be more jobs than people
U.S. labor force participation rate — the share of the adult population that has a job or is trying to find one — hit a record high in the late 1990's and has decreased since then. – the Heritage Foundation August 2014
Educational trends.
There aren’t enough people getting advance degrees, in relation to the needs of the market place.
In fact, a McKinsey study entitled “The World at Work”, estimated that by 2020 there will be a shortage of 30 to 40 million college-educated workers
A retiring workforce is second trend effecting supply.
Mark Hurd – 43% of US Workforce can retire in next 8 yrs
In Japan… more people are retiring than entering the workforce
The same is true in parts of Europe.
The retirement of baby boomers will create a shortage of skilled workers in mature economies worldwide, leading to higher wages and lower profits for the next 15 years. – the Conference Board
This will happen in the US within the next five years to 10 years…but the issue isn’t when the US crosses over, it’s that it is upon us.
To help guide our presentation today, we’ve framed a few polling questions of the audience. Here’s the first one:
By a show of hands,
>>Ask question.
The second trend we see is a huge shift the demographics of the labor force
The Alliance : Reed Hoffman & Ben Casnocha
Unbelievably on average, 10,000 Baby Boomers retire every day.
You need the right labor to execute on your business plans.
- A contingent workforce can be a dedicated workforce on certain projects that have start and stop dates.
We do this ourselves at IQNavigator.
Third trend we see in labor, is that a certain amount of the labor force wants employment in new ways.
180 degree shift in supply and demand
Candidates/individuals calling the shots on terms of assignment
The employer no longer defines the workplace; rather the employees priorities and preferences dictate terms of the agreement
These trends are profound and will have a great impact on companies securing the labor they need to run, grow and manage their businesses.
We see this with highly skilled workers who want to expand their resumes with projects with Multiple employers.
Baby Boomers – The brain drain.
75% of retirees want to continue to work – but they want the flexibility to enjoy their retirement.
36% of retirees say the ability to work part time would have encouraged them to keep working – even if it didn’t provide health benefits or meant a temporarily reduced pension.
38% of surveyed retirees indicated that being able to work seasonally (more time off) or on a independent contractor basis would have encouraged them to delay retirement.
But Retirees want, and often need…to extend their role in the workplace ...
but choose to do this as a non-employee.
Millennials
56% of millennials choose flexibility over more pay,
89% of Millennials would prefer to choose when and where they work rather than being placed in a 9-to-5 position.
60% percent say they plan to leave their job in fewer than three yearsShifting Regulatory statutes is making this easier – e.g. ACA
6 in 10 students say they are NOT considering a career in business, and 48% said they have NOT been encouraged to do so.
Average tenure for Millennials is 2 years, compared to 5 years for Gen X and 7 years for Baby Boomers.
These trends are fueling the war for talent.
It's becoming mainstream – Forbers.com WSJ.com
-- We also see the growing freelancer market…which allows skilled workers to work on small, specific projects.
I’m sure many of us in this room understand these trends.
There is a shortage of skilled labor, and a move to a non-employee workforce.
These trends are profound and will have a great impact on companies securing the labor they need to run, grow and manage their businesses.
This is mission critical for all organizations.
You need the right labor to execute on your business plans.
Here’s the second polling question: By a show of hands,
>>Ask question.
NOTE: SIG has some kind of electronic scoring system that they will administer.
These seismic shifts in the labor market present organizations with both challenges and opportunities.
Our presentation today is designed to help you navigate these changes and develop an effective workforce strategy to win.
Against this backdrop of greater economic uncertainty, the need for flexibility and cost savings, and the growth of the independent workers, what is a poor company to do?
Well, we suggest it is time to get innovative.
It is time to carefully think about your enterprise workforce needs in a more holistic way.
Over the past few years some experts have called this approach “Total talent management”. We believe a better term is “enterprise talent management”.
What is it?
Quite simply it is a holistic view of your entire workforce, considering both traditional employees and flexible workers in all their flavors!
Ultimately, we want to ensure that the right workers are available, in the right place, at the right time
Some of the major benefits of this approach:
Gain access to talent
Maximum business flexibility
Cost savings
As a result of these dramatic market forces, companies are increasing electing to source independent workers directly versus going through consulting firms and staffing agencies.
Not only does this approach provide significant cost savings opportunities versus 3rd party recruited resources, it often also results in better talent and quicker time to producitivity.
By a show of hands,
>>Ask question.
NOTE: SIG has some kind of electronic scoring system that they will administer.
At its core, this strategy is about optimizing the mix of traditional and flexible workers.
Determining the right mix for your organization is the million dollar question.
In truth, it is hard to answer…just like every company is unique, the answer to this mix question will be very unique for each company.
It is made even more complicated because the business world is dynamic. Both supply and demand are constantly in flux.
When it comes to talent, there are many factors to consider…not least of which is the fact that there are many different types of workers…
>>>Next slide.
In this graphic we’ve constructed a model to show the different types of workers which, when taken together, create your total workforce.
It is a model for talent supply, which includes:
Employees
Temporary workers
Freelancers
Independent contractors
Consultants
So now that we’ve looked at a model for talent supply. Let’s look at the other half: Talent Demand!
What is the optimal staffing level for your organization? What is the right mix of traditional versus flexible workers? Those answers will be different for every organization and depend on many factors.The main difficulty in answering this question is that talent demand is not static. Driven by a multitude of business, macro-economic, and demographic factors, enterprise demand for talent is constantly in flux. This makes predicting talent demand very challenging.If we were to plot the talent needs of an organization, it would hardly ever appear as a static or straight line. Rather, it often looks something like the wave-shaped line in the illustration here, with constantly shifting peaks and valleys of demand over a period of time.
This variable demand is usually satisfied with a mix of traditional workers and flexible workers. But the central challenge in this model, and the problem facing today’s business leaders, is to answer the question, “Where do we draw the line?”
What is the right flexible staffing level for the enterprise?
It is obviously not realistic to radically reduce or completely eliminate labor costs
Work still has to get done!!!
We can, however, reduce some of the fixed cost, while shifting some labor to a variable model
In an understaffed organization we typically find:
Staffing to some baseline capacity with FTEs
Then we use contingent labor to meet all variable need
This model is clearly not optimized:
It lacks speed, flexibility, cost savings
The long lead time to find workers can cause delays in work production
This approach creates a lot of stress
At the other end of the spectrum, you could staff with traditional FTE workers at a level that meets peak demand. However, with this approach of staffing conservatively at the high-water mark with traditional workers, the troughs, or valleys, become problematic.
This model is also clearly not optimized:
High fixed costs
If there is not enough work, then we have idle workers
Layoffs are often the knee-jerk reaction by management
Loss of flexibility (employees are much more challenging to reduce when demand slows than flexible workers)
Sub-optimal results when using generalists for specialized projects (you don’t benefit from tapping outside expertise)
Scope creep from managers who want to use available “bench” of talent
Low worker morale
Underutilization is not good for an organization and a sure-fire way to destroy morale and lose valuable talent!
The optimal staffing model seeks to strike a balance between traditional employees and flexible workers. It looks something like this:
Staff for optimal baseline levels
Use flexible workers for “one-off”, peak or special needs
Build a bench of workers for JIT needs
Hard and soft cost savings
This sounds great. And it is.
However, it is not easy. Just as each company is unique, the “right” answer will be unique for each organization.
So, our primary goal today is to get you thinking about how this “could” work for your company.
Ultimately, the secret to optimizing your workforce mix is to make sure you have the right workers, doing the right work, at the right time.
It sure sounds easy, doesn’t it?!. We’ll be the first to tell you its not, but it can be done. And, HR professionals have a huge role to play in it!
To help you think about this at a deeper level, we’ve developed a useful framework to help define what types of worker should be doing what types of work.
You might recall the slide from earlier, and the challenge of determining the optimal staffing level, and right mix of flexible workers. That answer will be different for every company and depends on many factors. To get started you’ll want to think about who should do the work.
This matrix is based on a definition of core work. Core work in this model is that work which is either proprietary to your organization, or mission critical. If your organization does not add any differentiated value, then the work should not be done within your organization. IP refers the skills/knowledge required to do the work.
So in this model: (First layer of build)
Core work, that relies on internal IP should be done by FT/PT employees of the company. (Traditional workers).
All the rest of the work could be done by some type of flexible worker…
Details: (Second layer of build)
Core work, relying on internal IP should be done by an employee of your company.
Core work, that relies on external IP is most often done by a Consultant from a traditional consulting firm, or sometimes an expert IC.
As the work becomes more non-core, then it lends itself to an IC or freelancer of some type.
Non-core work, that relies on internal IP is most often done by temps or freelancers.
Once you’ve figured out who should do the work you can begin to rationalize your org structure and allocating workers to the right category.
Now let’s talk about creating a high level strategy to enable an enterprise talent model.
In the world of strategy - Execution is where the tire hits the road!
This next section is intended as a starting framework for those of you thinking about how you might partner with others in your organization, and lead the charge towards developing a more holistic talent strategy for your company.
Keep it high level. Just read each bullet.
Keep it high level. Just read each bullet.
Keep it high level. Just read each bullet.
Given our audience, and the educational premise of HCI, we have a few guidelines and best practices to share with you today.
First and foremost, is the partnership between HR and Procurement. Historically the contingent workforce has been delegated to procurement because it was viewed as a commodity purchase.
Well, guess what? People aren’t parts!
And if the independent workforce is going to approach 50% of the total, then HR and Procurement need to work together in managing this vital segment of the workforce.
As we said earlier there is no right answer when it comes to the mix of Traditional vs Flexible workers.
Based on our experience, here are some general guidelines to consider as you think about the right mix for your organization:
Flexible workforce = 10-50% of total worker headcount (FTE & Flexible)
Temporary = 50-80% of flexible workforce
Freelancer = 5-10% of flexible workforce
Independent contractor = 10-40% of flexible workforce
Consulting = 5-10% of flexible workforce
CAVEAT: These are general guidelines. Each organization is unique! There is no single right answer…
Workers of any flavor have risk.
Engaging the independent workforce has a higher risk profile due to the prevalence of misclassified independent contractors, and many state and federal agencies’ bias towards all workers being employees.
Because of this worker misclassification enforcement is a growing problem for industry.
If you are going to direct source and engage independent workers, be sure you are doing it right!
One innovate solution for companies that direct source talent is to create a talent community of known contractors
We are big fans of this at TalentWave and have our own solution, called TalentBridge, to help clients build, curate, and engage proprietary populations of workers
It is a web-based population of known talent with specialized skills who are interested in working for you again
Who are they? Independent contractors, consultants, freelancers, retirees, interns, “silver medalists”
Our model forTalentBridge™
The right talent, in the right place, at the right time, engaged the right way!
Technology and managed services solution
A platform to curate and re-engage known flexible workers, safely and effectively
Pre-qualified and vetted
Known resources that know your company and culture. Not anonymous profile from a marketplace. On this slide, I think we talk about our solution is different – how we help mitigate risk by pre-qualifying and vetting workers
So that’s it for our presentation. We hope you gleaned some insights on how a variable workforce model can drive cost savings and business flexibility for your organization, and the vital role procurement has in making it work.
At this point we would be happy to answer any questions…